A bipartisan bill introduced last week by U.S. Sen. Bill Cassidy (R-LA) would amend safe harbors in the Employee Retirement Income Security Act and the Internal Revenue Code to permit plan sponsors to automatically re-enroll non-participants at least once every three years, unless the individual affirmatively opts out again.
“With over half of all Americans not on track for retirement and other safety nets like Social Security on track to go insolvent, we are in a retirement crisis,” said Sen. Cassidy, ranking member of the U.S. Senate Health, Education, Labor, and Pensions (HELP) Committee. “Auto re-enrollment puts workers in the better position to prepare for retirement while staying in control of their financial decisions.”
The Auto Reenroll Act of 2023, S. 2517, which Sen. Cassidy cosponsored alongside bill sponsor U.S. Sen. Tim Kaine (D-VA), would permit plans to sweep as a group everyone who meets the requirements for re-enrollment, rather than on each employee’s enrollment date, and they would only need to provide the re-enrollment opportunity to those who are not participating in the plan at all, according to a bill summary provided by the lawmakers.
Some employees choose to not participate in their employer’s retirement plan or take advantage of the full employer match when starting out and making entry level wages. However, many forget to join or increase their contribution as they move up in income, leaving significant money on the table, the summary says.
“Many Americans have the option to enroll in employer-sponsored retirement plans, but they do not take advantage of this benefit and miss out on critical retirement contributions from their employers,” said Sen. Kaine. “I’m proud to introduce this bipartisan bill to help more Americans take advantage of the retirement benefits offered to them and be on better financial footing.”
The legislation is supported by Fidelity Investments, the American Benefits Council, and Nationwide Retirement Solutions, and is under consideration in the Senate HELP Committee.